The number of new homes being built in England slumped by 19% in the past year, leading to thousands of job losses and undermining government targets to expand the housing stock.

A total of 33,400 new properties were started in the three months to the end of June, 2% more than in the previous quarter but 19% down on the same period of 2007, according to the Department of Communities and Local Government.

The number of new homes being started dropped to 147,500 in the year to the end of June, 12% fewer than during the previous 12 months and 20% below the peak reached in 2005-06.

Only a jump in the number of homes being built by housing associations and other social landlords prevented the situation deteriorating further after a 27% year-on-year slide in the number of properties started by private-sector developers.

The number of homes being built by registered social landlords soared 56% compared with the same three months of 2007, to stand at its highest quarterly level for 11 years.

Persimmon, Britain's second-largest housebuilder, said business held up largely as a result of work for social landlords and building its own "affordable" homes at a time when private sales have collapsed.

Chief executive Mike Farley said he would build 2,500 homes this year for housing associations or under a direct-grant scheme from the government. The total will represent 25% of the company's building starts this year.

Other housebuilders are expected to look for work from housing associations to ride out the recession. Government figures show a 57% increase in the number of social homes started compared with this time last year - the highest figure for 11 years.

However, more general targets to build millions more homes over the next 20 years will be harder to achieve, analysts said.

A government spokesman said: "We recognise that market conditions are currently difficult for housebuilders as a result of the global credit crunch, which is why we are putting measures in place to support industry, including more funding to buy unsold homes, and are constantly looking at what more we can do.

"However, a legacy of housing under-supply, and our ageing and growing population mean the conditions remain for a healthy housing market over the medium to long term, underpinned by low unemployment and low interest rates."